Cable television's turbulent history has taken a decided turn
for the better during the past decade as the number of systems in
operation soared to 4,430, the number of communities served climed to
13,100 and the number of subscribers "on the cable" increased
from 8,500,000 in 1974 to 27,800,00 in 1984!

But, bright tho these numbers are, cable television is still
basically an industry of unfulfilled promise . . . both for the customer
(less than five percent enjoy an form of the long-awaited
"Two-way" services and few find much escape from the "TV
wasteland" of programming) and for the cable system operator
(escalating costs and disppointing profits).

Cable television was begun in 1948 as a community antenna service
(CATV) to help those who could not receive conventional broadcast
television signals because of geographic location. Cable consisted
basically of a master antenna system serving communities that had litle
or no TV reception. John Walson of Service Electric Company, Mahanoy
City, Pennsylvania, is generally thought to have established the first
CATV system.

Although the cable industry remained small and underdeveloped for
almost a decade, it expanded as viewers became more discriminating.
Cable operators could no longer offer just a few local television
station to their subscribers; cable viewers also wanted to see
programming other than network offerings.

Operators began importing "distant signals" via microwave
from the closest city receiving conventional television. And public
grew even more interested in cable when it realized the medium could
also originate programming. A major industry seemed about to blossom.
Multiple system operators grew with the cable audiences.

Cable's growth was stunted, however, when the FCC effectively
froze its development with stiff regulations in the late 1960s as a
"broadcasting versus CATV" war raged for most of the decade.
These regulations were eased somewhat in 1972 when the FCC established
new rules governing the cable industry.

In 1975 satellite communications expanded programming capacities of
cable systems so that they no longer had to depand solely upon
broadcasters for products. Diversity became a hallmark of cable, and a
new facet of the industry was its role as a vehicle for pay TV.

Focusing most of their attention on wiring cities, towns and
suburbs over the last three decades, and intent on keeping pace with the
growing demand for cable programming services, the cable industry is
just now beginning to wire some of the major cities such as New York and
Chicago and cable TV operators are at last beginning to recognize the
virtually untapped business communications market, offering their
large-capacity channels to large users as an alternative to the local
telco loop.

An important breakthrough in the business area came last year in
Pittsburgh when Warner Amex Cable Communications signed up Westinghouse
for the first commercial use of cable in a major metropolitan area.

Under the agreement, Warner Amex is providing Westinghouse with a
high-speed, all digital cable link which will serve three Westinghouse
facilities in the downtown area of Pittsburgh. The Warner Amex cable
link also became part of the overall national communications network of
Westinghouse sending and receiving satellite-fed information for
Westinghouse facilities across the country, marking the first time a
cable communications company has been able to successfully interface
with a privately operated microwave system.

Bob Bennis, Manager of the Communications Systems Department of
Westinghouse, said, "These high speed digital communications facilities provided by Warner Amex will serve as vital links in the
advanced communications network being installed by Westinghouse in the
greater Pittsburgh area. This network is a major investment by
Westinghouse to improve the productivity of corporate operations in
Pittsburgh."

Looking at "CATV Markets in the United States," New York
City-based Frost & Sullivan sees the number of cable subscribers
growing from 17 million in 1981 to 40 million 10 years late and the nine
million of those who were pay-TV subscribers will nearly triple to 34
million by 1991, representing 85 percent of the basic CATV subscribers.
Revenues for cable operators will also soar, says the study, going from
$3.6 billion in 1981 to $11.4 billion 10 years later. Pay-TV is
expected to account for the largest spurt, going from $1.3 billion in
1981 to $4.5 billion in sales in 1991. The number of two-way
interactive cable-equipped homes will also rise substantially, according
to International Resource Development of Norwalk, Connecticut . . .
rising from 2.4 million households so equipped in 1982 to 5.8 million by
1984, then to 14.4 million by 1987 and to 36 million by 1992.

Actually the cable television business today is there businesses:
first, the community antenna television business bringing sharp clear
pictures to areas which otherwise would not receive them; second, the
premium entertainment business taking publishing concepts and applying
them to video . . . in other words, the business of identifying a
market, developing product for it and collecting revenues from both
advertisers and consumers; and third, the information business using
capacity built for other purposes to become a major player in the
information age.

The cable industry, earlier beset with problems with the
broadcasting industry and the federal government, is now finding local
governments its most formidable foe. Today five cents of every dollar
paid by cable subscribers goes to local government in a "hidden
tax."

Congress is now considering a bill (S-66 and HR-4103) to
"deregulate" the cable industry and cable interests and city
governments are talking "truce" in terms of a four-year rate
freeze at the beginning of a franchise term with freedom to raise rates
up to five percent a year without city approval thereafter.

Former NCTA President Tom Wheeler stated cable's position when
he said: "Cable's competitors are universally deregulated or
unregulated. Either through direct federal intervention or through
quirks in the law, these services are beyond the reach of local
governmental authorities. As a result these competitors enjoy a
significant competitive advantage. They don't pay franchise fees,
they don't have to give away service, they don't have to
underwrite various local ventures from production studios to police
firing ranges, they don't have to go to a regulatory body to seek
permission to adjust rates or services and they don't have to
expose their business to local political hyjinks when their license is
up. There is no way that cable can be described as a monopoly in the
face of all these alternative delivery methods and alternative services.
We may be the only wire in town (even that isn't true when one
considers unregulated SMATVs and telephone company provision of
competitive pathways) but cable systems aren't the only way
consumers can receive various services.

"Mayors and other local officials opposing Congressional
passage of the Cable Telecommunications Act, or demanding unrealistic
concessions, are running the risk of losing most of their authority over
cable TV to the Federal Communications Commission. Mayors fighting the
legislation, if successful, will have won a battle but will certainly
lose the war. The FCC made clear in two recent rulings that it will
allow local authorities only a "quite narrow" jurisdiction
over cable. Firing a loud warning shot across the bow of local
officials, the FCC said it is concerned about . . . and presumably will
strike down . . . any local regulation that may impede new cable
services and burden interstate communications."

James McKinney, chief of the FCC's Mass Media Bureau, sent an
even louder warning to local and state communications regulators. In a
recent speech before the Federal Communications Bar association, he
denounced them as "mini-FCCs." and said the real FCC is fully
justified in preempting their power.

Former FCC Commissioner Nicholas Johnson was really not
exaggerating when he said: "The difference between ordinary
television and cable is the difference between a garden hose and Niagara
Falls."

A state-of-the-art cable system offers subscribers more than 100
channels with the capability of offering not only a wide range of
network programming but also the potential for local access, a range of
interactive services such as home security systems and even video games,
a method of information retrieval from data banks, an "electronic
order blank" connection with stores, Videotext, and countless other
services.

"Cable is more of everything," says Les Brown, adding,
"Beyond being just a television medium, it is also a communications
network for a municipality. Many of the new cable installations link
schools, libraries, hospitals, and police and fire departments for
point-to-point communications."

Ever since it hooked up with satellites less than a decade ago and
added scroes of additional programming options, cable television has
been one of the "glamour" industries. With the explosion in
cable-only programming now available there are now some 43
satellite-delivered services.

Cable companies have embarked on a $4.4 billion construction
program that will provide a 60 percent increase in cable plant at new
and upgraded systems by 1987. This in turn will increase subscriber
households dramatically, to around 55 million by 1990. Cable companies
are now adding subscribers at a nationwide rate of a monthly net gain in
subscribers in excess of 300,000 homes.

"The growth of the CATV industry into the larger cities and
additional communities, the expansion of existing systems and the
rebuilding and replacement of existing systems, will result in
significant equipment purchases over the coming years," predicts a
recent industry study by Frost & Sullivan. The chart at the buttom
of this page projects the growth in the number of cable systems and of
basic service subscribers, indicating a steady pattern through 1991.

Cable TV is coming to mean more than one-way entertainment
services. In fact, "CATV is driving hard to become the first
supplier of universal broadband, integrated communications networks
capable of simultaneously transmitting two-way voice, data and viceo
signals," notes a recent report from Strategic of San Jose,
California. It predicts that two-way CATV could play "a major role
in the development of such a universal communications service before the
turn of the century. The market for these services is expected to be
greater than the market for telephone services today. In fact, the new
system might well absorb telephone services as we know them."

What does the future hold? A recent IRD study says: "By 1990
fiber optics will have replaced coaxial cable, which will allow the
carriage of over 200 full video channels. Some of these channels will
be able to feed full video upstream from home video cameras." IRD
also suggests that cable subscribers then will be able to circumvent
telcos by use of fiber-optic multipoint-to-multipoint transmission, and
could "even use home cameras to see each other during
conversations."

Despite dramatic growth, the line on cable television remains the
same as it has been through two decades: unfulfilled potential.

COPYRIGHT 1984 Nelson Publishing
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